ADP Estimates U.S. Companies Added 179,000 Jobs in April

Companies in the U.S. added workers in April, signaling the labor market is strengthening, data from a private report based on payrolls showed today.

Employment increased by 179,000 in April from a revised 207,000 the prior month, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 198,000 advance this month.

The gain in employment projected by ADP may be insufficient to help the economy accelerate after a surge in food and fuel costs caused growth to slow to a 1.8 percent annual rate in the first three months of the year. Businesses added 200,000 jobs in April and the jobless rate held at 8.8 percent, economists project a Labor Department report to show in two days.

“This pace keeps things moving forward but not at a strong enough growth rate to really, really improve labor market conditions and improve the economy,” said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. in New York who forecast a gain of 175,000. “The labor market is still underperforming the expectations where growth will be and should be at this point.”

Estimates for the ADP data ranged from increases of 164,000 to 240,000, according to the Bloomberg survey of 34 economists.

Over the previous six reports, ADP’s initial figure was closest to the Labor Department’s first estimate of private payrolls in February, when it understated the gain in jobs by 5,000. The estimate was least accurate in December, when it overestimated the increase in employment by 184,000.

Fewer Firings

Another report today showed U.S. employers announced fewer job cuts in April than the same month last year, a sign that the labor market is firming. Planned firings decreased 4.8 percent to 36,490 last month from April 2010, according to Chicago-based Challenger, Gray & Christmas Inc. Government agencies accounted for the biggest cutbacks by industry.

Stock-index futures were little changed after the report. The contract on the Standard & Poor’s 500 Index maturing in June was at 1,352.1 at 8:58 a.m. in New York, matching yesterday’s close.

Today’s ADP report showed an increase of 41,000 workers in goods-producing industries, which includes manufacturers and construction companies. Employment at factories rose by 25,000.

Service providers added 138,000 workers, ADP said.

Companies employing more than 499 workers expanded their workforces by 11,000 jobs. Medium-sized businesses, with 50 to 499 employees, created 84,000 jobs and small companies also increased payrolls by 84,000, ADP said.

Economy Recovering

“Employment has begun to show signs of improvement,” Scott Davis, chief executive officer of United Parcel Service Inc. (UPS), said during an April 26 call with analysts. “In the U.S., unemployment dipped below 9 percent for the first time in almost two years, further evidence that the recovery continues.”

While payrolls have grown each month since October, Federal Reserve Chairman Ben S. Bernanke said on April 27 that central bankers would like to see more strength in the U.S. labor market, noting that a recovery has been “quite slow.”

“The labor market is improving gradually,” Bernanke said to reporters during the first-ever press conference following a Federal Open Market Committee meeting. “We would like to make sure that that is sustainable. The longer it goes on, the more confident we are.”

‘Anemic’ Recovery

Federal Reserve Bank of Boston President Eric Rosengren today said record stimulus is necessary to spur the “anemic” economy and that raising interest rates to combat increasing food and fuel prices would impede growth.

“With significant slack in labor markets, stable inflation expectations, and core inflation well below our longer run target, there is currently no reason to slow the economy down with tighter monetary policy,” Rosengren said in prepared remarks for a speech in Boston.

Overall payrolls, which include government workers, probably rose by 185,000 in April, according to the median forecast of economists surveyed before the Labor Department’s May 6 report.

The ADP report is based on data from about 340,000 businesses employing more than 21 million workers.

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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